shares regardless of what the books show or the apparent form of the transfer.12 A father who bought shares for his minor children and put them in their names was held to be a stockholder.13 § 50. Stockholder by estoppel. It has been said that "those persons who hold themselves or allow themselves to be held out as owners of stock are liable whether they own stock or not," and that the rules applying to ownership of national bank stock are about the same as those which apply to partnerships. But the more correct statement is this: One who allows himself to be represented as owner by the books of the corporation, when he has knowledge of facts that put him upon notice that he is so held out, will not be heard to dispute his liability. Certain instances of this rule were noticed in the last section. In accordance with this rule, one who receives checks for dividends upon the stock, even though she merely indorses them without knowledge of their contents, will not be heard to deny her liability." One who acts as an officer of a national bank, with constructive knowledge of the fact that to act as officer he must be the owner of at least ten shares, will not be heard to dispute knowledge of the fact that the books represented him to be the owner of fifty shares, even though he were in fact ignorant of the matter. One who acts as a stockholder with the knowledge that is imputed to him by the receipt of dividends will be held as a stockholder. He is none the less a stockholder, though as officer of the bank he 12 Davis v. Stevens, 17 Blatch. 259; Horton v. Mercer, 71 Fed. R. 153; Case v. Small, 10 Fed. R. 722; Hubbell v. Houghton, 86 Fed. R. 547. 13 Foster v. Chase, 75 Fed. R. 797. It was put on the ground that the minors could not consent. See also Kerr v. Urie, 37 Atl. R. 789. 1 Pardee, Cir. Judge, in Case v. Small, 10 Fed. R. 722. This case is a very good instance of the recklessness of judges in using language. The point of holding out was not involved at all, but the case was decided on the point that a man was liable as stockholder, because while the stock was held in the name of another, which other was held out as owner, he was yet the real owner. 2 Keyser v. Hitz, 133 U. S. 138. 3 Finn v. Brown, 142 U. S. 56. 4 Stephens v. Follett, 43 Fed. R. 842. 5 took the stock in order to protect the bank; nor is he exonerated by an agreement of the bank officer that if the stock would be taken by the stockholder the bank would buy the shares at any time he wished. So a man will not be heard to say that he was a trustee of the stock and thus exempt from liability, if he knowingly permit the books to show him to be the owner; but even if the books show him to be a trustee, he will be liable if he be the real owner. Where there was an over-issue of stock, a party having bought stock of the president of a bank, who issued to the party new certificates, and, having retained the old certificates, hypothecated them, thus over-issuing the stock, it was held that the new stockholder was liable as such.8 As to transfer by descent or by will, see the next section. § 51. Executors, administrators, guardians and trustees. As already seen, section 5152, Revised Statutes of the United States, exempts from personal liability as national bank stockholders persons holding stock as executors, administrators, guardians or trustees. The statute does not in express terms require the books to show the trust relation of the stockholder toward his beneficiary. No case has yet held that the fact cannot be shown contrary to the books of the bank. In one case it is implied that such fact could be shown. It follows that if the proper orders as to the transfer have been given to the bank officers and the trustee is Bundy v. Jackson, 24 Fed. R. 628. But stock held by the cashier as cashier is not chargeable against him personally. Baker v. Old Nat. Bank, 86 Fed. R. 1006. This case is clearly wrong unless the words "as cashier" would be notice of the trusteeship. 6 Bowden v. Santos, 1 Hughes, 158, Fed. Cas. No. 1716. 7 Lewis v. Switz, 74 Fed. R. 381; Davis v. First Baptist Society, Fed. Cas. No. 3633; Welles v. Larrabee, 36 Fed. R. 866. 8 Burt v. Bailey, 73 Fed. R. 693, 36 U. S. App. 676. This case seems to be correct, for the canceled stock ceased to be stock, its place being taken by the new stock. If the old certificates had been sold to a bona fide purchaser, he would not have obtained stock by the over-issue. It seems plain, too, that he could not have been held as a stockholder. Scovil v. Thayer, 105 U. S. 143. 1 Horton v. Mercer, 71 Fed. R. 153. A pledgee is personally liable only on the ground of negligence or not otherwise estopped, or if he has not known of the transfer to himself, in neither case could he be held liable. The same section 5152 of the Revised Statutes of the United States makes the trust estate liable. Where the deceased died, being a stockholder, it would seem to be certain that, under this statute, the executor would be liable as an executor out of the funds of the estate. It has been held that the executor would be so liable even though the deceased in his life-time had made a transfer but the transfer had not been registered. But where the executor has made a transfer of the bequeathed stock to the devisee the estate can no longer be held liable. But a legatee who has received a legacy ordered to be paid to her before but actually delivered after the insolvency of the bank is liable on the testator's shares to the amount of the assets received; but the same case holds that in an action to charge the legatee with assets, the legatee would not be held where the delivery of the legacy was made before the liability of the estate as stockholder was incurred. In the case of a guardianship under a state statute it was held that the estate of those minors who had reached majority at the time of the decree could not be held in an action against the guardian.9 § 52. Right of stockholder to transfer.-The right of the stockholder to have a transfer made on the books is absolute, unless the bank has a lawful claim on the shares, or fraud or estoppel. Lucas v. Coe, 86 Fed. R. 972. But see Kerr v. Urie, 37 Atl. R. 789. 2 See 3 Thompson on Corp., secs. 3194, 3198; Lucas v. Coe, 86 Fed. R. 972. 3 See also Stedman v. Eveleth, 6 Met. 114; Mauser v. Pratt, 101 Mass. 60; Sayles v. Bates, 15 R. L. 342, as to state statutes. 4 Richmond v. Irons, 121 U. S. 27; Parker v. Robinson, 71 Fed. R. 256, 33 U. S. App. 368; Irons v. Manuf. Nat. Bank, 21 Fed. R. 197; Wickham v. Hull, 60 Fed. R. 326. 'Davis v. Weed, Fed. Cas. No. 3658. 6 Blackmore v. Woodward, 71 Fed. R. 321, 18 C. C. A. 57; Witters v. Sowles, 32 Fed. R. 130. Where the executor failed to make a transfer to himself he was held liable as executor. Baker v. Beach, 85 Fed. R. 836. 7 Witters v. Sowles, supra. 9 Mansur v. Pratt, 101 Mass. 60. unless the law forbids the transfer, or unless the parties have by agreement made the stock not transferable.1 The bank may have an opportunity to satisfy itself of the genuineness of the transfer and of the capacity of the parties. The bank is liable for permitting a transfer upon a forged power of attorney or upon one executed by a person not having the capacity, if the bank has notice of the want of capacity.3 The usual mode of transfer is by indorsement of the certificate by signing the power of attorney usually printed on the back of the certificate. The usual practice recognized as valid is to sign in blank, and the transferee fills in the power of attorney. The transfer is complete when made on the books whether a certificate be issued or not. If the articles of agreement permit a transfer and no legal prohibition thereof exists, the bank cannot require its own claim to be paid as preliminary to a transfer. If a transfer be enjoined by a proper court the bank cannot permit it. The national banks are not governed by the laws of the state as to transfers.8 § 53. Unrecorded transfers.- No question causes more difficulty than the effect of a transfer not entered on the bank's stock book, but completed as between the parties by indorsement and delivery of the certificate. In the absence 1 Purchase v. New York Ex. Bank, 3 Robt. 164; Helm v. Swiggett, 12 Ind. 194; Byne v. Union Bank, 9 Robt. 433; Johnson v. Laflin, 5 Dill. 65, 103 U. S. 800. wright, 22 Wend. 348; Lee v. Citizens' Bank, 5 Ohio Dec. 21. 5 Agricultural Bank v. Wilson, 24 Me. 273; Keyser v. Hitz, 133 U. S. 138; National Bank v. Watsontown 2 Chew v. Bank of Baltimore, 14 Bank, 105 U. S. 217. Md. 299. 3 Chew v. Bank of Baltimore, 14 Md. 299; Pollock v. National Bank, 7 N. Y. 274; Peck v. Bank of America, 16 R. I. 710. It has been held that a bank is not liable for a guardian's transfer in fraud of his ward's rights. Bank of Vir. v. Craig, 6 Leigh, 399. 6 Bank of Attica v. Manuf. & Trad. Bank, 20 N. Y. 501. The same rule applies to national banks. Bullard v. Bank, 18 Wall. 589, overruling several circuit courts. 7 Purchase v. New York Ex. Bank, 3 Robt. 164. 8 Scott v. Pequonnock Nat. Bank, 15 Fed. R. 494. Contra, Hobbs v. 4 Commercial Bank V. Cart Western Nat. Bank, Fed. Cas. 6551a. of any regulation as to recording transfers, the transfer is complete when completed between the parties. But.where the statute provides for a registration of the transfer on the books of the company, as in the national bank act, or when the by-laws provide for a registration, or, what is the same thing,' when the certificates on their face are made transferable on the books of the company, it is conceded that as between the parties a complete title passes by an unrecorded transfer. On principle the legal title would not pass until the entry was recorded, because of the effect of the provision for registering. An execution or attachment lien put upon the shares standing in the name of the transferror would, when completed by a sale, relate back to the date of the levy. And the question is, would it take precedence of the rights of the unrecorded transferee? Now it is conceded that the certificates are not negotiable under the law merchant by all the well-considered authorities. Therefore the attachment or execution lien being entered on the books, when completed by sale makes a legal title as of the date of the levy, when the prior transfer being unrecorded the transferee had but an equitable title. The purchaser at the execution sale becomes a bona fide purchaser for value if the creditor and the bank had no notice of the unrecorded transfer at the date of the levy. If the creditor or the bank had notice of the equity of the unrecorded transferee, neither the creditor as purchaser at the sale nor any other purchaser at the sale would be a bona fide purchaser." Assuming, then, that the creditor and the bank had no notice, the purchaser obtains a legal title by the sale, which legal title is that of a bona fide purchaser. The conclusion follows that when equities are equal, as they are in case of bona fide purchasers, the legal title will prevail. There is no escape, then, from the 1 State v. McIver, 2 S. C. 25; Mechanics' Bank. Asso. v. Mariposa Co., 3 Robt. 395. In this case it is amusing to compare the brief of the attorney for the defendant, Wm. M. Evarts, with the opinion of the court. The latter is a verbatim copy of the former, but there are no quotation marks. 2 Farmers' Gold Bank v. Wilson, 58 Cal. 600; Telford Co. v. Gerhab, 13 Atl. R. 90. |